(Reuters circulated the following article on April 10.)
NEW YORK — Railroad stocks have steam left for further gains despite a recent run-up and growing concerns that rising fuel prices will slow economic growth, analysts said.
A surge in global freight traffic and U.S. economic expansion last year fueled record volumes and allowed railroads to raise prices for the first time in decades – even those who faced service disruptions because they were caught unprepared by the demand.
That has fueled investor optimism on Wall Street that railroads will post strong first-quarter results later this month. Union Pacific Corp., the largest U.S. railroad and one that struggled last year with service issues, raised its quarterly outlook last month because West Coast storms had a smaller-than-expected impact.
Tony Hatch, an independent rail analyst, said that he expects most U.S. railroads to meet, if not beat, first-quarter profit estimates.